I’ve been paying attention lately to some of the things successful people have learned over the years. I came across some great points – some things that i am learning or have learned – and thought i’d share. Here are a few sure-fire ways to build a solid foundation in your 20s, from 3 guys who are wildly successful.
Mark Cuban on Personal Finance.
Cuban is a billionaire entrepreneur and owner of the Dallas Mavericks, but he is mostly known as a Shark on the show Shark Tank. He has this advice about investing and credit cards in your 20s:
“The money I save on interest by not having debt is better than any return I could possibly get by investing that money in the stock market. I should have paid off my credit cards every 30 days.”
This is wonderful personal finance advice for us 20-somethings. Folks, if you are carrying balances on credit cards…stop.
Here’s why: Your credit card probably has an interest rate anywhere between 10%-25% – the average is 15.05%. This means that you would have to make 15% monthly on any investments or earn more than 15% interest in your saving each month just to offset CC interest. (Hint: Neither one of those things are going to happen. Warren Buffet wouldn’t even clear those monthly returns on a consistent basis).
Here’s an alternative. Pay off your credit cards monthly to avoid paying interest. Even if you don’t save a dime in your 20’s, it will be better to have no debt than to have money in a savings account or investment portfolio but still owe piles of interest on credit card debt. Ideally, you’ll have zero debt, savings, and investments before you strike the big 3-0.
Let me add this for the Personal Finance novices: You do not have to be afraid of credit cards. These little plastic angels have tremendous advantages if you use them correctly. If you budget properly and understand the cost of each swipe, credit can be a valuable tool, and even save you bunches…yes I said save you bunches.
For example, I currently have 4 credit cards that I use for various purposes. I pay each of them off in full every 30 days (I have paid less than $20 of interest since I started using credit). By doing this, I reap the benefits of added protection on purchases and types of insurance and warranties, but mostly i use them for reward bonuses and cheap travel.
Tim Ferriss on Learning
The angel investor and best-selling author of “The 4-Hour Workweek” has this advice for us:
“In your 20s, optimize for learning, not earning. Work directly under or with master dealmakers, and acquire skills.”
I heard a long time ago that “your 20s are for learning, your 30s are for earning.” To be honest with you my overconfident, gung-ho 20 year-old-self replied “who says you can’t do both in your 20s…I’m too smart not to do both.” While I still have a lot of runway before 30 arrives, I have a feeling the older and wiser guys will win out on this one. There’s always the Air BnB’s and genius app developers of the world who make millions before they hit puberty, but most us are in this for the long haul…and that’s ok.
Ferriss also said this in regards to the sexy postgrad jobs,
“It often comes down to prioritizing skill acquisition over immediate post-college earning. McKinsey or Goldman can be seductive, but it’s easy to get trapped in a 20-plus-year path of paying for a bloated lifestyle that is always a bit more expensive than the year before. Serfs can become self-made kings, but consultants tend to remain consultants. The only true job security is a superior skill set.“
It’s not to say that you can’t earn in your 20s, but it is to say that you should prioritize learning.
Since I graduated from undergrad I’ve been living my life 6 months at a time. I completed graduate school last September and decided to take a job at a startup company for about 1/8 of my “market value” in the U.S. based on my degrees and experience. I did this because I believed in the founder of the company, and valued the hands-on learning experience as somewhat of a real-life MBA.
Blake Mycoskie on Passion
Blake is the Founder and “Chief Shoe-Giver” of TOMS. Say what you will about TOMS cause, but Blake is a success story. He wished he knew the following in his 20s about living with passion:
“In my 20s I wish I knew that the best advice for any person is to follow their passion as opposed to chasing money.”
Spending time doing things that you are passionate about now will open up opportunities to do things that you are passionate about in the future. Living with the mentality of “I’ll do what I have to do now so one day I’ll be able to what I really want to do” can be detrimental. It’s likely that you will never reach that perfect time to make the move, and when you do make the move you might not have relevant skills and experiences to execute your passion well.
Blake also says, “It’s hard in your 20s not to worry about money, but focus on making sure you do something you love…I’ve seen time and time again that the people who foster their true passions and true callings are the ones that end up the most successful.”
Making the decision now to do what you’re passionate about is a difficult thing. You have your financial health to think about, and possibly some student loans to pay off. You have to see the rest of your friends’ new promising positions at well-known companies. You might not be the most popular or win the status contest amongst your peers right now – or even the approval of family and friends – but if your passion is legit that stuff won’t matter.
Over to you! What are some lessons you’ve learned so far in your 20s that you like to share with others?